This section and other parts of this Form 10-Q contain forward-looking
statements that involve risks and uncertainties. Our actual results may differ
materially from the results discussed in the forward-looking statements. Factors
that might cause such differences include, but are not limited to, those
discussed below under the caption "Forward-Looking Statements" and in Part II,
Item 1A (Risk Factors) of this Form 10-Q, and also those in Part I, Item 1A
(Risk Factors) of our Annual Report on Form 10-K for 2019. The following
discussion should be read in conjunction with the condensed consolidated
financial statements and notes thereto included elsewhere in this Quarterly
Report on Form 10-Q and the consolidated financial statements and notes thereto
in our Annual Report on Form 10-K for 2019. All information is based on our
fiscal calendar.

Overview

Ross Stores, Inc. operates two brands of off-price retail apparel and home
fashion stores -- Ross Dress for Less® ("Ross") and dd's DISCOUNTS®. Ross is the
largest off-price apparel and home fashion chain in the United States, with
1,566 locations in 39 states, the District of Columbia and Guam as of August 1,
2020. Ross offers first-quality, in-season, name brand and designer apparel,
accessories, footwear, and home fashions for the entire family at savings of 20%
to 60% off department and specialty store regular prices every day. We also
operate 266 dd's DISCOUNTS stores in 20 states that feature a more
moderately-priced assortment of first-quality, in-season, name brand apparel,
accessories, footwear, and home fashions for the entire family at savings of 20%
to 70% off moderate department and discount store regular prices every day.

Effects of the COVID-19 Pandemic on Our Business

The United States and other countries are experiencing an ongoing, major global
health pandemic related to the outbreak of a novel strain of coronavirus,
COVID-19. Governmental authorities in affected regions have taken and continue
to take dramatic actions in an effort to slow down the spread of the disease.
Like other retailers across the country, we temporarily closed all store
locations, our distribution centers, and buying and corporate offices. Our
closures took effect March 20, 2020, and we remained closed through a portion of
our fiscal second quarter. We also instituted "work from home" measures for many
of our associates.

The impacts from the COVID-19 pandemic and the related economic disruption have
had a material adverse impact on our results of operations, financial position,
and cash flows in the first half of fiscal 2020. The condensed consolidated
results reflect the significant revenue decline and other impacts from our
temporary store closures (for approximately half of the first quarter and 25
percent of the second quarter). We expect material adverse effects from the
pandemic to continue for an extended period of time, and through the current
fiscal year. This will cause our results for interim periods throughout fiscal
2020 to not be comparable to our results in the corresponding prior year
periods.

All our store and distribution center locations were closed from March 20, 2020
through May 14, 2020, when we began a phased process of resuming operations. On
average, our stores were open for about 75 percent of the second quarter, with
the vast majority of our store locations open and operating by the end of June
2020, though operating on shorter hours compared to the prior year. All our
distribution centers were reopened by the end of May 2020.

The temporary closure of our stores significantly impacted our ability to sell
seasonal inventory in a timely manner. As we reopened our stores and resumed
operations, a significant portion of the merchandise in our stores was aged and
out of season. We recorded an inventory valuation charge of $313 million in the
first fiscal quarter of 2020 based on our estimate of the portion of inventory
held as of May 2, 2020 that we expected to sell below its original cost. The
ultimate impact of these markdowns was dependent on the pace of sell through of
this inventory. During the initial reopenings, sales were ahead of our
conservative plans as we benefitted from pent-up demand and aggressive
markdowns. As a result of faster than expected sell through of the aged
inventory, we recognized a $174 million benefit in the second quarter due to the
partial reversal of the first quarter below cost inventory valuation charge. In
the weeks after reopening, trends were negatively impacted from depleted store
inventory levels while we were ramping up our buying and distribution
capabilities.

The ongoing effect of the pandemic on consumer behavior and spending patterns
remains highly uncertain. Despite the initial surge in customer demand as our
stores reopened, we expect customer demand to be suppressed for an extended
period. In addition, it is possible that there may be resurgences in the spread
of COVID-19 again in the future, in one or more regions, which could require
stores and distribution centers to close again nationally, regionally, or in
specific locations, and further negatively impact our revenue and operations.
                                       17
--------------------------------------------------------------------------------

In response to COVID-19, we incurred costs to reopen our stores and distribution
centers, and costs to implement additional processes and procedures to
facilitate social distancing, enhance cleaning and sanitation activities, and to
provide personal protective equipment to all associates. These actions, combined
with various other actions taken to reduce costs, resulted in approximately $65
million of additional net costs in the second quarter of 2020. We expect to
incur higher costs related to our response to COVID-19 on an ongoing basis.

To preserve our financial liquidity and enhance our financial flexibility, we
borrowed $800 million from our revolving credit facility in March 2020,
completed a $2.0 billion public bond offering in April 2020, and entered into a
new $500 million 364-day senior revolving credit facility in May 2020.

In addition, we suspended our stock repurchase program in March 2020 and
suspended quarterly dividends in May 2020, and we have taken measures to reduce
our expenses, inventory receipts, and planned capital expenditures. Beginning
April 5, 2020, we implemented temporary furloughs for a large portion of our
hourly store and distribution center and other associates in our buying and
corporate offices who could not work productively while our stores and
distribution centers were closed. Employee health benefits for eligible
associates continued during the temporary furlough at no cost to the impacted
associates. We also reduced payroll expenses through temporary salary reductions
for senior executives and other personnel, which remained in effect until May
24, 2020, when more than half of our stores reopened. In conjunction with these
payroll expense reduction measures, effective April 1, 2020, the non-employee
members of our Board of Directors suspended the cash elements of their director
compensation, which remained in effect until August 2020.

In May 2020, in connection with the phased reopening of our store and distribution center locations, we began recalling many of these furloughed associates as they were able to resume productive work. As of August 1, 2020, with almost all of our stores and all distribution centers reopened, the majority of these associates have returned to work.



Beginning in May 2020, we suspended rent payments associated with the leases for
our temporarily closed stores. During the second quarter of fiscal 2020, we
negotiated rent deferrals and/or rent abatements (primarily for second quarter
lease payments) for a significant number of our stores. The repayment of the
deferrals will be at later dates, primarily in fiscal 2021. We have recorded
accruals for rent payment deferrals and have recorded rent abatements associated
with the second quarter as a reduction of variable lease costs.

Given the unprecedented impact the COVID-19 pandemic has had on our business,
and the continued uncertainty surrounding the pandemic, including its unknown
duration and severity, and the unknown overall impact on consumer demand and
store productivity, we are unable to forecast the full impact on our business.
We expect that impacts from the COVID-19 pandemic and the related economic
disruption will have a material adverse impact on our consolidated results of
operations, financial position, and cash flows throughout the remainder of
fiscal 2020, in each interim period, and potentially beyond.

                                       18
--------------------------------------------------------------------------------

Results of Operations

The following table summarizes the financial results for the three and six month periods ended August 1, 2020 and August 3, 2019:



                                                  Three Months Ended                                                 Six Months Ended
                                          August 1, 2020          August 3, 2019         August 1, 2020                  August 3, 2019
Sales
Sales (millions)                       $      2,685             $      3,980           $      4,527           $       7,777
Sales (decline) growth                        (32.5  %)                  6.5  %               (41.8  %)                 6.1  %
Comparable store sales (decline)                         1                       3                      2                         3
growth                                          (12  %)                    3  %                     n/a                   2  %

Costs and expenses (as a percent of
sales)
Cost of goods sold                             77.4  %                  71.4  %                87.7  %                 71.3  %
Selling, general and administrative            19.4  %                  14.9  %                20.6  %                 14.8  %
Interest expense (income), net                  1.1  %                  (0.1  %)                0.8  %                 (0.1  %)

Earnings (loss) before taxes (as a
percent of sales)                               2.1  %                  13.8  %                (9.1  %)                14.0  %

Net earnings (loss) (as a percent of
sales)                                          0.8  %                  10.4  %                (6.3  %)                10.7  %

1 For three months ended August 1, 2020, comparable store sales represents sales from reopened stores from the date of the store reopening through the end of the quarter. 2 Given that stores were open for less than seven weeks of the 13-week period ended May 2, 2020, the comparable store sales metric for the six months ended August 1, 2020, is not meaningful. 3 For the three and six month periods ended August 3, 2019, comparable store sales represents sales from stores that have been open for more than 14 complete months.





Stores. In response to the impacts from the COVID-19 pandemic, we have reduced
our planned new store openings for fiscal 2020. We did not open any new stores
in the second quarter of fiscal 2020, and plan to open about 39 stores in the
fiscal third quarter. Our longer term expansion strategy is to open additional
stores based on market penetration, local demographic characteristics,
competition, expected store profitability, and the ability to leverage overhead
expenses. We continually evaluate opportunistic real estate acquisitions and
opportunities for potential new store locations. We also evaluate our current
store locations and determine store closures based on similar criteria.

                                                           Three Months Ended                                                                  Six Months Ended
Store Count                                      August 1, 2020                August 3, 2019                   August 1, 2020              August 3, 2019
Beginning of the period                            1,832                         1,745                            1,805                       1,717
Opened in the period                                   -                            28                               27                          56
Closed in the period                                   -                            (1)                               -                          (1)
End of the period                                  1,832                         1,772                            1,832                       1,772



Sales. Sales for the three month period ended August 1, 2020, decreased $1.3
billion, or 32.5%, compared to the three month period ended August 3, 2019. This
was primarily due to the negative impact from store closures during the period
and COVID-19's negative impact on customer demand. We opened 60 net new stores
between August 3, 2019 and August 1, 2020. The sales from these stores partially
offset the sales decline while the stores were open in the period.

Sales for the six month period ended August 1, 2020, decreased $3.2 billion, or
41.8%, compared to the six month period ended August 3, 2019. This was primarily
due to the negative impact from store closures during the period and COVID-19's
negative impact on customer demand. We opened 60 net new stores between
August 3, 2019 and August 1, 2020. The sales from these stores partially offset
the sales decline while the stores were open in the period.

                                       19
--------------------------------------------------------------------------------

Comparable store sales. Due to the temporary closing of all our stores as a
result of the COVID-19 global pandemic, our historical definition of comparable
store sales is not applicable. For the three month period ended August 1, 2020,
in order to provide a performance indicator for our stores as they reopen, we
are temporarily reporting comparable store sales to include stores initially
classified as comparable stores at the beginning of fiscal 2020, and the sales
increase or decrease of these stores for the days the stores were open in the
current period against sales for the same days in the prior year. Given that
stores were open for less than seven weeks of the 13-week period ended May 2,
2020, the comparable store sales metric for the six month period ended August 1,
2020, is not meaningful, and is therefore not provided.

For the three month period ended August 1, 2020, comparable store sales were
down 12% for reopened stores from the date of their reopening to the end of the
fiscal second quarter. Comparable stores sales were impacted by COVID-19's
negative impact on customer demand and by other factors. During the initial
reopenings, sales were ahead of our conservative plans as we benefitted from
pent-up demand and aggressive markdowns to clear aged inventory. In the weeks
thereafter, trends were negatively impacted from depleted store inventory levels
while we were ramping up our buying and distribution capabilities.

Our sales mix for the three and six month periods ended August 1, 2020 and August 3, 2019 is shown below:



                                                   Three Months Ended                                             Six Months Ended
                                           August 1, 2020 1       August 3, 

2019 August 1, 2020 1 August 3, 2019 Home Accents and Bed and Bath

                       25  %                  23  %                   26  %                  24  %
Ladies                                              25  %                  27  %                   25  %                  27  %
Shoes                                               14  %                  14  %                   14  %                  14  %
Men's                                               14  %                  15  %                   13  %                  14  %
Accessories, Lingerie, Fine Jewelry,
and Fragrances                                      13  %                  13  %                   13  %                  13  %
Children's                                           9  %                   8  %                    9  %                   8  %
Total                                              100  %                 100  %                  100  %                 100  %

1 Sales mix for the three and six month periods ended August 1, 2020 represents sales for the period the stores were open.





Our historic strategies and store expansion program have contributed to our
sales gains in the past. However, given the impacts from the COVID-19 pandemic
on our results for the first half of fiscal 2020, and the significant ongoing
impacts and uncertainties, including the unknown overall impact on consumer
demand and shopping behavior, and the unknown duration of the pandemic and
responses to it (which may require stores and distribution centers to close
again nationally, regionally, or in specific locations), we cannot be sure that
our strategies and eventual resumption of our store expansion program will
result in a continuation of our historical sales growth or in a recovery of, or
an increase in net earnings.

Cost of goods sold. Cost of goods sold for the three month period ended August 1, 2020, decreased $763.7 million compared to the same period in the prior year, primarily due to lower sales resulting from the negative impact from the temporary store closures in the period, COVID-19's negative impact on customer demand, and the $174 million partial reversal of the first quarter below cost inventory valuation charge due to the faster than expected sell through of aged inventory. These decreases were partially offset by higher markdowns to clear aged and seasonal inventory, expenditures for COVID-19 related measures, and higher packaway-related expenses.



Cost of goods sold for the six month period ended August 1, 2020, decreased $1.6
billion compared to the same period in the prior year, mainly due to the lower
sales from the closing of all store locations starting on March 20, 2020 through
a portion of the second quarter of fiscal 2020, COVID-19's negative impact on
customer demand post store reopening, and the temporary furlough of most hourly
associates in our distribution centers and some associates in our buying
offices. These decreases were partially offset by higher markdowns used to clear
aged and seasonal inventory, expenditures for COVID-19 related measures, and
higher packaway-related expenses.

Selling, general and administrative expenses. For the three month period ended
August 1, 2020, selling, general and administrative expenses ("SG&A") decreased
$72.5 million compared to the same period in the prior year, mainly due to store
closures and payroll-related cost reduction measures in response to the COVID-19
pandemic (including the temporary furlough of most hourly associates in our
stores prior to reopening and some associates in our corporate offices) and
reduction in non-business critical operating expenses, partially offset by
COVID-related expenses for supplies, cleaning, and payroll related to additional
safety protocols.

                                       20
--------------------------------------------------------------------------------

For the six month period ended August 1, 2020, SG&A decreased $215.4 million
compared to the same period in the prior year, mainly due to store closures and
payroll-related cost reduction measures in response to the COVID-19 pandemic
(including the temporary furlough of most hourly associates in our stores prior
to reopening, and some associates in our corporate offices) and reduction in
non-business critical operating expenses, partially offset by payments to
associates while our stores were closed net of the expected employee retention
credits under the CARES Act, and COVID-related expenses for supplies, cleaning,
and payroll related to additional safety protocols.

Interest expense (income), net. Interest expense (income), net for the three and
six month periods ended August 1, 2020, increased $33.6 million and
$45.9 million, respectively, compared to the same periods in the prior year.
These increases were primarily due to higher interest expense on long-term debt
due to the issuance of $2.0 billion of Senior Notes in April 2020, lower
interest income due to lower interest rates, and higher interest expense on
short-term debt due to the draw down on our $800 million revolving credit
facility in March 2020, partially offset by higher capitalized interest
primarily related to the construction of our Brookshire, Texas distribution
center. Interest expense (income), net for the three and six month periods ended
August 1, 2020 and August 3, 2019, consists of the following:

                                                  Three Months Ended                                                     Six Months Ended
($000)                                    August 1, 2020           August 3, 2019                 August 1, 2020       August 3, 2019

Interest expense on long-term debt $ 28,331 $ 3,283

$        38,512          $     6,566
Interest expense on short-term debt             3,599                        -                          5,296                    -
Other interest expense                          1,031                      227                          1,309                  540
Capitalized interest                           (3,349)                  (1,118)                        (5,503)              (1,883)
Interest income                                  (757)                  (7,174)                        (4,093)             (15,640)

Interest expense (income), net $ 28,855 $ (4,782)

$        35,521          $   (10,417)



Taxes on earnings (loss). On March 27, 2020, the CARES Act was signed into law.
The CARES Act made several significant changes to business tax provisions
including modifications for net operating losses, employee retention credits,
and deferral of employer payroll tax payments. The modifications for net
operating losses eliminate the taxable income limitation for certain net
operating losses and allow the carry back of net operating losses arising in
2018, 2019, and 2020 to the five prior tax years.

Our effective tax rates for the three month periods ended August 1, 2020 and
August 3, 2019, were approximately 61% and 25%, respectively. The increase in
the effective tax rate of 36% for the three month period ended August 1, 2020
compared to the three month period ended August 3, 2019 was primarily due to
fluctuations in pre-tax earnings, partially offset by a revaluation of deferred
taxes related to the CARES Act. Our effective tax rates for the six month
periods ended August 1, 2020 and August 3, 2019, were approximately 31% and 24%,
respectively. The increase in the effective tax rate of 7% for the six month
period ended August 1, 2020 compared to the six month period ended August 3,
2019 was primarily due to a pre-tax loss in the current period. The effective
tax rate is impacted by changes in tax law and accounting guidance, location of
new stores, level of earnings, tax effects associated with share-based
compensation, and the resolution of tax positions.

Net income (loss). Net income for the three month period ended August 1, 2020
was $22.0 million compared to $412.7 million for the three month period ended
August 3, 2019. The decrease of $390.7 million was primarily due to the lower
sales resulting from the negative impact from the temporary store closures in
the period and COVID-19's negative impact on customer demand, higher markdowns
to clear aged and seasonal inventory (partially offset by the $174 million
partial reversal of the first quarter below cost inventory valuation charge),
and higher expenditures for COVID-19 related measures.

Net loss for the six month period ended August 1, 2020 was $(283.8) million
compared to net income of $833.9 million for the six month period ended
August 3, 2019 primarily due to the lower sales from the closing of all store
locations starting on March 20, 2020 through a portion of the second quarter of
fiscal 2020, and COVID-19's negative impact on customer demand, higher markdowns
to clear aged and seasonal inventory, payments to associates while our stores
were closed, net of the expected employee retention credits under the CARES Act,
and higher expenditures for COVID-19 related measures, partially offset by
income tax benefits.

Earnings (loss) per share. Diluted earnings per share for the three month periods ended August 1, 2020 and August 3, 2019 were $0.06 and $1.14, respectively. The (95)% decrease in diluted earnings per share for the three month period


                                       21
--------------------------------------------------------------------------------

ended August 1, 2020, was attributable to the lower sales resulting from the
negative impact from the temporary store closures in the period and COVID-19's
negative impact on customer demand, higher markdowns to clear aged and seasonal
inventory (partially offset by the $174 million partial reversal of the first
quarter below cost inventory valuation charge), and higher expenditures for
COVID-19 related measures.

Diluted loss per share was $(0.81) for the six month period ended August 1,
2020, compared to diluted earnings per share of $2.29 for the six month period
ended August 3, 2019. The diluted loss per share for the six months ended
August 1, 2020 was primarily attributable to the lower sales from the closing of
all store locations starting on March 20, 2020 through a portion the second
quarter of fiscal 2020, and COVID-19's negative impact on customer demand,
higher markdowns to clear aged and seasonal inventory, payments to associates
while our stores were closed net of the expected employee retention credits
under the CARES Act, and higher expenditures for COVID-19 related measures,
partially offset by income tax benefits.

Financial Condition

Liquidity and Capital Resources



As previously noted, the United States and other countries are experiencing a
major global health pandemic related to the outbreak of a novel strain of
coronavirus, COVID-19. Governmental authorities in affected regions have taken,
and continue to take, dramatic actions in an effort to slow down the spread of
the disease. Similar to other retailers across the country, we temporarily
closed all store locations, our distribution centers, and buying and corporate
offices, effective March 20, 2020 through May 14, 2020, when we began a phased
process of resuming operations. On average, our stores were open for about 75
percent of the second quarter, with the vast majority of our store locations
open and operating by the end of June 2020, though operating on shorter hours
compared to the prior year. All our distribution centers were reopened by the
end of May 2020.

The impacts from the COVID-19 pandemic and the related economic disruption have
had a material adverse impact on our results of operations, financial position,
and cash flows in the first half of fiscal 2020. Our results reflect the impact
of the significant revenue decline from our temporary store closures, higher
markdowns to clear aged and seasonal inventory, and increased expenditures for
COVID-19 related measures.

To preserve our financial liquidity and enhance our financial flexibility, we
borrowed $800 million from our revolving credit facility in March 2020,
completed a $2.0 billion public bond offering in April 2020, and entered into a
$500 million 364-day senior revolving credit facility in May 2020.

In addition, we suspended our stock repurchase program in March 2020 and
suspended quarterly dividends in May 2020, and we have taken measures to reduce
our expenses, inventory receipts, and planned capital expenditures. Beginning
April 5, 2020, we implemented temporary furloughs for a large portion of our
hourly store and distribution center and other associates in our buying and
corporate offices who could not work productively while our stores and
distribution centers were closed. Employee health benefits for eligible
associates continued during the temporary furlough at no cost to the impacted
associates. We also reduced payroll expenses through temporary salary reductions
for senior executives and other personnel, which remained in effect until May
24, 2020, when more than half of our stores reopened. In conjunction with these
payroll expense reduction measures, effective April 1, 2020, the non-employee
members of our Board of Directors suspended the cash elements of their director
compensation, which remained in effect until August 2020.

In May 2020, in connection with the phased reopening of our store and distribution center locations, we began recalling many of these furloughed associates as they were able to resume productive work. As of August 1, 2020, with almost all of our stores and all distribution centers reopened, the majority of these associates have returned to work.



Beginning in May 2020, we suspended rent payments associated with the leases for
our temporarily closed stores. During the second quarter of fiscal 2020, we
negotiated rent deferrals and/or rent abatements (primarily for second quarter
lease payments) for a significant number of our stores. The repayment of the
deferrals will be at later dates, primarily in fiscal 2021. We recorded accruals
for rent payment deferrals and recorded rent abatements associated with the
second quarter as a reduction of variable lease costs.

We ended the second quarter of fiscal 2020 with over $4.3 billion in liquidity, which in addition to our unrestricted cash balances, includes the new $500 million 364-day senior revolving credit facility.


                                       22
--------------------------------------------------------------------------------

Historically, our primary sources of funds for our business activities have been
cash flows from operations and short-term trade credit. Our primary ongoing cash
requirements are for merchandise inventory purchases, payroll, operating and
variable lease costs, taxes, and for capital expenditures in connection with new
and existing stores, and investments in distribution centers, information
systems, and buying and corporate offices. We also used cash to repurchase stock
under our stock repurchase program and to pay dividends, and we may use cash for
the repayment of debt as it becomes due.

Due to the COVID-19 pandemic and related economic disruptions, and with the
temporary closure of all store locations effective March 20, 2020 which
continued through a portion of the second quarter (and with the possibility that
stores, distribution centers, and other facilities may need to close again), we
anticipate interruptions to our cash flows from operations. We anticipate that
we will be required to rely more on our cash reserves and we expect to carefully
monitor and manage our cash position in light of ongoing conditions and levels
of operations.

                                                                        Six Months Ended
($000)                                                         August 1, 2020           August 3, 2019
Cash provided by operating activities                      $       172,421          $     1,083,463
Cash used in investing activities                                 (250,047)                (249,797)
Cash provided by (used in) financing activities                  2,520,131                 (868,344)

Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents

$     2,442,505          $       (34,678)



Operating Activities

Net cash provided by operating activities was $172.4 million for the six month
period ended August 1, 2020. This was primarily driven by lower merchandise
receipts as we closely managed inventory levels and used packaway inventory to
replenish our stores. This was partially offset by merchandise payments for
receipts prior to the shutdown of our operations and the net loss due to the
lower sales from the closing of all store locations starting on March 20, 2020
through a portion of the second quarter. Net cash provided by operating
activities was $1.1 billion for the six month period ended August 3, 2019 and
was primarily driven by net earnings excluding non-cash expenses for
depreciation and amortization.

The decrease in cash flow from operating activities for the six month period
ended August 1, 2020, compared to the same period in the prior year was
primarily driven by the net loss due to lower sales from the closing of all
store locations starting on March 20, 2020 through a portion of the second
quarter (compared to net earnings last year), partially offset by higher
accounts payable leverage. Accounts payable leverage (defined as accounts
payable divided by merchandise inventory) was 90%, 71%, and 74% as of August 1,
2020, February 1, 2020, and August 3, 2019, respectively. The increase in
accounts payable leverage from the prior year was primarily driven by lower
packaway inventory, lower merchandise receipts, and extended payment terms.

As a regular part of our business, packaway inventory levels will vary over time
based on availability of compelling opportunities in the marketplace. Packaway
merchandise is purchased with the intent that it will be stored in our
warehouses until a later date. The timing of the release of packaway inventory
to our stores is principally driven by the product mix and seasonality of the
merchandise, and its relation to our store merchandise assortment plans. As
such, the aging of packaway varies by merchandise category and seasonality of
purchases, but typically packaway remains in storage less than six months.
However, given the uncertainty around customer demand due to the COVID-19
pandemic, a portion of our current packaway inventory may remain in storage
longer than our historical cycles. We expect to continue to take advantage of
packaway inventory opportunities to maximize our ability to deliver bargains to
our customers.

Changes in packaway inventory levels impact our operating cash flow. As of August 1, 2020, packaway inventory was 25% of total inventory compared to 46% at the end of fiscal 2019. As of August 3, 2019, packaway inventory was 43% of total inventory compared to 46% at the end of fiscal 2018.

Investing Activities



Net cash used in investing activities was $250.0 million and $249.8 million for
the six month periods ended August 1, 2020 and August 3, 2019, respectively,
primarily related to capital expenditures.

                                       23
--------------------------------------------------------------------------------

Our capital expenditures were $250.0 million and $250.3 million for the six
month periods ended August 1, 2020 and August 3, 2019, respectively. Our capital
expenditures include costs to build, expand, and improve distribution centers
(primarily related to the ongoing construction of our Brookshire, Texas
distribution center); open new stores and improve existing stores; and for
various other expenditures related to our information technology systems, buying
and corporate offices.

As previously noted, due to the COVID-19 pandemic and related economic
disruptions, and to preserve our financial liquidity, we reduced our capital
expenditure plans for fiscal 2020. Capital expenditures for fiscal 2020 are
projected to be approximately $420 million, compared to our original plan of
approximately $730 million. Our remaining, planned capital expenditures are
expected to be used to fund commitments related to the construction of our
Brookshire, Texas distribution center, costs for fixtures and leasehold
improvements to open planned new Ross and dd's DISCOUNTS stores, investments in
certain information technology systems, and for various other needed
expenditures related to our stores, distribution centers, buying, and corporate
offices. We expect to fund capital expenditures with available cash, including
cash we obtained from our public debt offering and the draw down on our $800
million credit facility.

Financing Activities

Net cash provided by financing activities was $2.5 billion for the six month
period ended August 1, 2020. Net cash used in financing activities was
$868.3 million for the six month period ended August 3, 2019. The increase in
cash provided by financing activities for the six month period ended August 1,
2020, compared to the six month period ended August 3, 2019, was primarily due
to the completion of our $2.0 billion public debt offering, draw down on our
$800 million revolving credit facility, and the suspension of our share
repurchases and dividends in the second quarter of 2020.

In July 2019, we entered into an $800 million unsecured revolving credit
facility, which replaced our previous $600 million unsecured revolving credit
facility. The current credit facility expires in July 2024, and contains a $300
million sublimit for issuance of standby letters of credit. The facility also
contains an option allowing us to increase the size of our credit facility by up
to an additional $300 million, with the agreement of the lenders. Interest on
borrowings under this facility is based on LIBOR (or an alternate benchmark
rate, if LIBOR is no longer available) plus an applicable margin (currently 75
basis points) and is payable quarterly and upon maturity. The revolving credit
facility may be extended, at our option, for up to two additional one-year
periods, subject to customary conditions.

In March 2020, we borrowed $800 million under our revolving credit facility.
This loan bears interest at LIBOR plus 0.875% (currently 1.76%). As of August 1,
2020, we had $800 million outstanding, and no standby letters of credit were
outstanding, under the revolving credit facility.

In April 2020, we issued an aggregate of $2.0 billion in unsecured senior notes
in four tenors as follows: $700 million of 4.600% Senior Notes due April 2025,
$400 million of 4.700% Senior Notes due April 2027, $400 million of 4.800%
Senior Notes due April 2030, and $500 million of 5.450% Senior Notes due April
2050.

In May 2020, we amended the $800 million revolving credit facility (the "Amended
Credit Facility") to temporarily suspend for the second and third quarters of
fiscal 2020 the Consolidated Adjusted Debt to EBITDAR ratio financial covenant,
and to apply a transitional modification to that ratio effective in the fourth
quarter of fiscal 2020. The Amended Credit Facility also established a new
temporary minimum liquidity requirement effective for the first quarter of
fiscal 2020 and through the end of April 2021. As of August 1, 2020, we were in
compliance with these amended covenants.

In May 2020, we entered into an additional $500 million 364-day senior revolving
credit facility which expires in April 2021. Interest on borrowings under this
facility will be based on LIBOR (or an alternate benchmark rate, if LIBOR is no
longer available) plus an applicable margin (currently 175 basis points) and is
payable quarterly and upon maturity. As of August 1, 2020, we had no borrowings
under this facility, and the $500 million credit facility remains in place and
available.

The new revolving credit facility is subject to the same minimum liquidity and
Consolidated Adjusted Debt to EBITDAR ratio financial covenants as are in the
Amended Credit Facility. In addition, the new revolving credit facility contains
restrictions on stock repurchases and restrictions on post draw down cash
balances on the new revolving credit facility. As of August 1, 2020, we were in
compliance with these covenants.

                                       24
--------------------------------------------------------------------------------

In June 2020, we amended the covenants associated with the $65 million outstanding Series B unsecured senior notes. The amended covenants are consistent with the corresponding covenants in our existing revolving credit facilities. As of August 1, 2020, we were in compliance with these covenants.



We repurchased 1.2 million and 6.6 million shares of common stock for aggregate
purchase prices of approximately $132.5 million and $640.3 million during the
six month periods ended August 1, 2020 and August 3, 2019, respectively. We also
acquired 0.3 million and 0.6 million shares of treasury stock under our employee
stock equity compensation programs, for aggregate purchase prices of
approximately $32.3 million and $52.3 million during the six month periods ended
August 1, 2020 and August 3, 2019, respectively. In March 2019, our Board of
Directors approved a two-year $2.55 billion stock repurchase program through
fiscal 2020. As of the end of the second quarter of fiscal 2020, we had $1.143
billion remaining under the stock repurchase program. Due to the current
economic uncertainty stemming from the severe impact of the COVID-19 pandemic,
we suspended our stock repurchase program in March 2020. We have no plans to
repurchase any additional shares for the remainder of the fiscal year.

For the six month periods ended August 1, 2020 and August 3, 2019, we paid cash
dividends of $101.4 million and $186.6 million, respectively. Due to the current
economic uncertainty stemming from the severe impact of the COVID-19 pandemic,
we suspended our quarterly dividends in May 2020.

The COVID-19 pandemic and related economic disruptions, including the temporary
closure of all of our store locations effective March 20, 2020 through a portion
of the second quarter, have and continue to create significant uncertainty and
challenges. We believe that existing cash balances, bank credit lines, and trade
credit are adequate to meet our near-term operating cash needs and to fund our
planned capital investments.

Contractual Obligations and Off-Balance Sheet Arrangements



The table below presents our significant contractual obligations as of August 1,
2020:

                                           Less than                1 - 3                3 - 5              After 5
($000)                                      one year                years                years                years                Total¹

Recorded contractual obligations:


  Senior notes                      $           -          $    65,000          $   950,000          $ 1,300,000          $  2,315,000
  Short-term debt2                        802,507                    -                    -                    -               802,507
  Operating leases                        641,743            1,182,929              800,150              660,407             3,285,229
  New York buying office ground
lease3                                      5,883               13,562               14,178              943,983               977,606

Unrecorded contractual obligations:


  Real estate obligations4                  8,930               33,671               35,620              109,672               187,893
  Interest payment obligations            123,290              213,897              207,556              814,850             1,359,593
  Purchase obligations5                 2,272,543               15,199                3,731                    -             2,291,473

Total contractual obligations $ 3,854,896 $ 1,524,258

$ 2,011,235 $ 3,828,912 $ 11,219,301



1 We have a $70.4 million liability for unrecognized tax benefits that is included in Other long-term liabilities on our interim
Condensed Consolidated Balance Sheet. This liability is excluded from the schedule above as the timing of payments cannot be reasonably
estimated.
² Includes $800 million draw down on our revolving credit facility and other short-term debt financing.
3 Our New York buying office building is subject to a 99-year ground lease.
4 Minimum lease payments for leases signed that have not yet commenced.
5 Purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction projects, store
fixtures and supplies, and information technology services, transportation, and maintenance contracts.



Other than the unrecorded contractual obligations noted above, we do not have any material off-balance sheet arrangements as of August 1, 2020.


                                       25
--------------------------------------------------------------------------------

Senior notes. As of August 1, 2020, we also had outstanding Series B unsecured
senior notes in the aggregate principal amount of $65 million, held by various
institutional investors. The Series B notes are due in December 2021 and bear
interest at 6.530%. Borrowings under these Senior Notes are subject to certain
financial covenants that were amended in June 2020, and are consistent with the
corresponding covenants in the our existing revolving credit facilities. As of
August 1, 2020, we were in compliance with these covenants.

We also had outstanding unsecured 3.375% Senior Notes due September 2024 with an aggregate principal amount of $250 million. Interest on the 2024 Notes is payable semi-annually.



In April 2020, we issued an aggregate of $2.0 billion in unsecured senior notes
in four tenors as follows: $700 million of 4.600% Senior Notes due April 2025,
$400 million of 4.700% Senior Notes due April 2027, $400 million of 4.800%
Senior Notes due April 2030, and $500 million of 5.450% Senior Notes due April
2050.

All our senior notes are subject to prepayment penalties for early payment of principal.

Interest on these notes is included in interest payment obligations in the table above.



Standby letters of credit and collateral trust. We use standby letters of credit
outside of our $800 million revolving credit facility in addition to a funded
trust to collateralize our insurance obligations. As of August 1, 2020,
February 1, 2020, and August 3, 2019, we had $4.2 million, $4.2 million, and
$5.5 million, respectively, in standby letters of credit outstanding and
$56.7 million, $56.0 million and $55.9 million, respectively, in a collateral
trust. The standby letters of credit are collateralized by restricted cash and
the collateral trust consists of restricted cash, cash equivalents, and
investments.

Trade letters of credit. We had $10.7 million, $11.2 million, and $28.2 million
in trade letters of credit outstanding at August 1, 2020, February 1, 2020, and
August 3, 2019, respectively.

Dividends. In May 2020, we announced the suspension of our quarterly dividends.

Critical Accounting Policies and Estimates



Management's Discussion and Analysis of Financial Condition and Results of
Operations is based on our condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America. The preparation of our condensed consolidated
financial statements requires our management to make estimates and assumptions
that affect the reported amounts. These estimates and assumptions are evaluated
on an ongoing basis and are based on historical experience and on various other
factors that management believes to be reasonable. Given the global economic
climate and additional or unforeseen effects from the COVID-19 pandemic, these
estimates are more challenging, and actual results could differ materially from
our estimates. During the second quarter of fiscal 2020, there have been no
significant changes to the critical accounting policies discussed in our Annual
Report on Form 10-K for the year ended February 1, 2020.

See Note A to the Condensed Consolidated Financial Statements - Summary of Significant Accounting Policies (Recently Adopted Accounting Standards) for information regarding our adoption of ASU 2019-12.


                                       26
--------------------------------------------------------------------------------

Forward-Looking Statements



This report may contain a number of forward-looking statements regarding,
without limitation, the rapidly developing challenges and our plans and
responses to the COVID-19 pandemic and related economic disruptions, including
adjustments to our operations, planned new store growth, capital expenditures,
and other matters. These forward-looking statements reflect our then-current
beliefs, plans, and estimates with respect to future events and our projected
financial performance, operations, and competitive position. The words "plan,"
"expect," "target," "anticipate," "estimate," "believe," "forecast,"
"projected," "guidance," "looking ahead," and similar expressions identify
forward-looking statements.

Future impact from the ongoing COVID-19 pandemic, and other economic and
industry trends that could potentially impact revenue, profitability, operating
conditions, and growth are difficult to predict. Our forward-looking statements
are subject to risks and uncertainties which could cause our actual results to
differ materially from those forward-looking statements and our previous
expectations, plans, and projections. Such risks are not limited to but may
include:

•The uncertainties and potential for further significant business disruptions
arising from the recent and ongoing COVID-19 pandemic, including distribution
center closures, store closures, and restrictions on customer access.
•Unexpected changes in the level of consumer spending on, or preferences for,
apparel and home-related merchandise, which could adversely affect us.
•Impacts from the macro-economic environment, financial and credit markets,
geopolitical conditions, pandemics, or public health and public safety issues,
that affect consumer confidence and consumer disposable income.
•Our need to effectively manage our inventories, markdowns, and inventory
shortage in order to achieve our planned gross margins.
•Competitive pressures in the apparel and home-related merchandise retailing
industry.
•Risks associated with selling and importing merchandise produced in other
countries and from supply chain disruptions in other countries, including those
due to COVID-19 closures.
•Unseasonable weather that may affect shopping patterns and consumer demand for
seasonal apparel and other merchandise.
•Our dependence on the market availability, quantity, and quality of attractive
brand name merchandise at desirable discounts, and on the ability of our buyers
to purchase merchandise to enable us to offer customers a wide assortment of
merchandise at competitive prices.
•Information or data security breaches, including cyber-attacks on our
transaction processing and computer information systems, which could result in
theft or unauthorized disclosure of customer, credit card, employee, or other
private and valuable information that we handle in the ordinary course of our
business.
•Disruptions in our supply chain or in our information systems that could impact
our ability to process sales and to deliver product to our stores in a timely
and cost-effective manner.
•Our need to obtain acceptable new store sites with favorable consumer
demographics to achieve our planned new store openings.
•Our need to expand in existing markets and enter new geographic markets in
order to achieve planned market penetration.
•Consumer problems or legal issues involving the quality, safety, or
authenticity of products we sell, which could harm our reputation, result in
lost sales, and/or increase our costs.
•An adverse outcome in various legal, regulatory, or tax matters that could
increase our costs.
•Damage to our corporate reputation or brands that could adversely affect our
sales and operating results.
•Our need to continually attract, train, and retain associates with the retail
talent necessary to execute our off-price retail strategies.
•Our need to effectively advertise and market our business.
•Changes in U.S. tax, tariff, or trade policy regarding apparel and home-related
merchandise produced in other countries, which could adversely affect our
business.
•Possible volatility in our revenues and earnings.
•An additional public health or public safety crisis, demonstrations, natural or
man-made disaster in California or in another region where we have a
concentration of stores, offices, or a distribution center that could harm our
business.
•Our need to maintain sufficient liquidity to support our continuing operations
and our new store openings.

The factors underlying our forecasts are dynamic and subject to change. As a
result, any forecasts or forward-looking statements speak only as of the date
they are given and do not necessarily reflect our outlook at any other point in
time. We disclaim any obligation to update or revise these forward-looking
statements.

                                       27

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses